politics, theory, action

Posts categorized "April Fools"

August 15, 2012

On August 9, the US Justice Department announced it was ending a criminal investigation into allegations that Goldman Sachs committed securities fraud in its underwriting and marketing of mortgage-backed securities in the months leading up to the Wall Street crash of September 2008. The department said it would not file charges against the bank or any of its employees.

As a special favor to Goldman, the Obama administration’s Justice Department took the unusual step of making a public announcement that it had cleared the bank of wrongdoing.

The allegations stemmed from a detailed, 640-page report on the financial crisis issued in April of 2011 by the Senate Permanent Subcommittee on Investigations. The report, based on a two-year investigation and 56 million pages of evidence, documented rampant fraud and criminality by major banks and the complicity of credit rating firms and federal bank regulators. In releasing the report, the chairman of the committee, Senator Carl Levin, said the panel’s two-year probe had uncovered “a snake pit rife with greed, conflicts of interest and wrongdoing.”

The largest section of the report by far, comprising 240 pages, was devoted to a scrupulously documented account—citing internal emails, memoranda, prospectuses and interviews—of how Goldman Sachs, beginning in December 2006, offloaded billions in toxic sub-prime mortgage holdings to investors by packaging them into complex mortgage-backed securities and collateralized debt obligations (CDOs). Goldman sold the investments while concealing the source of the mortgages, the fact that they were losing value, and Goldman’s belief that they would decline further.

As the report substantiated, Goldman further defrauded its clients by betting for its own profit that the securities it was recommending would collapse, without telling its customers that it was doing so.

The committee referred its findings to the Justice Department, making clear it believed criminal prosecutions were warranted. It also suggested that Goldman CEO Lloyd Blankfein, who testified before the panel in April 2010 and flatly denied taking a net “short” position on mortgage-backed securities or amassing profits by defrauding clients, be prosecuted for perjury.

Last Thursday, the same day that the Justice Department gave Goldman a free pass, the bank reported that the Securities and Exchange Commission (SEC) had concluded its own civil investigation into a $1.3 billion sub-prime mortgage deal dating from 2006 and decided to take no action.

These actions exemplify the operation of the aristocratic principle in what passes for American “justice”. Bankers can lie, steal, cheat and defraud the public without limit, causing human suffering and social ruin on a global scale, with no fear of being held accountable. They are not subject to the laws that apply to mere mortals. They operate with impunity, a law unto themselves.

Of course, to secure this status, the financial lords must devote a portion of their fortunes to bribing politicians, parties, regulators and courts, from the president on down. But this hardly has to be concealed any longer since it has been essentially sanctioned by the Supreme Court’s ruling on corporate campaign donations.

The current crisis has revealed how completely the bankers rule behind the trappings of democracy. Instead of being led away in chains and having their ill-gotten wealth seized for treating the world economy as their personal gambling casino—a crooked one at that—the financial oligarchs were rewarded with trillions stolen from the public purse. Now the state, bankrupted by the bailout of Wall Street, is clawing back a portion of the cost by destroying social programs and public services and impoverishing the working class.

In its August 9 statement on Goldman Sachs, the Justice Department said it had conducted “an exhaustive review of the [Senate] report,” but concluded that “based on the law and evidence as they exist at this time, there is not a viable basis to bring criminal prosecution…”

This is a contemptible lie, as a reading of the Senate Permanent Subcommittee on Investigations report makes clear.

On page 329, for example, the report states:“The Goldman Sachs case history shows how one investment bank was able to profit from the collapse of the mortgage market, and ignored substantial conflicts of interest to profit at the expense of its clients in the sale of RMBS [residential mortgage-backed securities] and CDO securities.”

On page 376, we find: “… Goldman engaged in securitization practices that magnified risk in the market by selling high-risk, poor quality mortgage products to investors around the world.”

On page 602, under the heading “Analysis of Goldman’s Conflicts of Interest” the following subheadings are listed:

The report concludes with a survey of federal securities laws that apply to Goldman’s activities. On page 606, for example, the following appears: “With respect to a broker-dealer, the SEC has held: ‘When a securities dealer recommends a stock to a customer, it is not only obligated to avoid affirmative misstatements, but also must disclose material adverse facts to which it is aware. That includes disclosure of “adverse interests” such as “economic self interest” that could have influenced its recommendation.’”

No one with a straight face can claim that Goldman did not violate federal laws in its money-mad drive to profit from the collapse of the housing market. The Senate report is a devastating indictment of criminal practices that pervade not only the actions of Goldman Sachs, but all of the major banks, hedge funds and financial institutions.

The role of the government in shielding the financial mafia—not a single leading US banker has been prosecuted since the crash of 2008—shatters all claims that the financial system can be reformed. The grip of the financial aristocracy over society can be broken only through the independent, revolutionary mobilization of the working class on the basis of a socialist program. At the center of that program is the expropriation of the major banks and their transformation into public utilities under the democratic control of the working people.

September 25, 2011

We—my wife Liza Featherstone and son Ivan Henwood and I—paid a visit to the Occupy Wall Street protest yesterday afternoon. Here’s an illustrated report. I also did a segment for my radio show. Audio for that is at the bottom of this entry.

The big media have largely ignored the OWS protest (though if you’re part of a certain kind of network on Facebook, you can’t miss it). Called first by Adbusters with only the most minimal agenda, it’s taking on a life of its own, as people trickle in from all over. And I do mean minimal—the agenda is supposed to evolve spontaneously. When I talked with one of the organizers last week, she told me that they merely hoped “to build the new inside the shell of the old,” and though that sounds seductively wonderful, I’m not sure how robust such an approach can really be.

Or, to quote the event’s Facebook page, named in the now-ubiquitous hashtag fashion (#OCCUPYWALLSTREET):

we zero in on what our one demand will be, a demand that awakens the imagination and, if achieved, would propel us toward the radical democracy of the future

I don’t think that has Lloyd Blankfein trembling in his shoes. Not that I know what could make him tremble, aside from a few quarterly losses for Goldman.

When we got to Wall Street, a band of what appeared to be several hundred were conducting the “closing bell” march, joining in the traditional observation of the end of the trading day on the New York Stock Exchange. The dominant chant was: “Banks got bailed out, we got sold out.” Here’s glimpse of what it looked like, from the corner where George Washington was inaugurated for the first time.

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Posters promoting the event, exhibiting that Adbusters style that’s a reminder that Judith Butler was so right to say that you have to inhabit what you parody.

The crowd was a mix of locals and migrants. I chatted with people who’d come from Missouri and Maine to express frustration and show solidarity. (They’re on the audio segment.) The woman from Maine was unemployed for a year and willing to stay as long as anyone else is there—through January, if that’s what it takes. But I also talked with locals from Brooklyn and Queens. Onlookers and passers-by were neutral to friendly—there were no jeers except some aimed for a lone and odious anti-Semite.

Principles were being worked on in standard “consensus” fashion, which apparently means writing comments on pages taped to a wall. (The type is readable if you click on the pix to enlarge them.)

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I asked the guy who made the “utopian experiments” sign what he had in mind. (The interview is on the audio segment.) He said he wanted to see a rebirth of 1960s-style “intentional communities,” though more entrepreneurial this time, capable of supporting themselves through green business and cyberschemes. Aside from this apostle of green entrepreneuriship, I overheard others talking about how Wall Street stifled small business—as if small business didn’t pay worse and support more right-wing politicians than big business. It was a very mixed bag ideologically. It seems like the latest iteration of American populism, which hates Wall Street and internationalization but loves small business and the local. Of course, livestreaming the proceedings on the web (see here) depends on a huge technical infrastructure, but no one thinks about that at these events.

I was skeptical of this at first, and I still am. There’s no agenda at all. It’s mostly about process—meaning consensus. There’s no organization to speak of. But maybe people will just keep trickling in and it will grow and persist and something good could come of it. Word is that some buses will be coming in from Wisconsin soon. At some point, though, I fear the NYPD will stop putting up with a semi-permanent occupation of a small park. I hope not. But if you’re listening to this, and are in a position to head to lower Manhattan, check it out. Zuccotti Park, at the corner of Broadway and Liberty St.

April 01, 2009

For about a year now I've been reading S. M. Stirling's novels of the Change. The basic idea is that a strange calamity overtakes the world, rendering all explosives, firearms, batteries, and electric energy (even steam, actually) useless. It's basically a device to throw the world into pre-17th century conditions. I've been interested because of my tendency toward apocalypticism (worries about peak oil, climate change, financial collapse) and the fact that I have no valuable skills.

But, it seems like my worries here have turned into a skill: I've compiled a detailed set of plans for building defenses (fortifying part of the town and colleges) as well as alliances with the Mennonites and other farms. Really, the key is a three-fold plan: shelter, food, defense. The defense has been hard. Some people think we can rely on guns. I think that's not useful--bullet supplies are not endless.

Fortunately, I've convinced the college where I teach to begin mandatory training for all the students, 2 hours a day, every day.

At first people thought that only the athletes needed to be trained in archery, sword fighting, and shield work and that the rest of the students could focus on crafting bows and arrows as well as making chain mail and armor. It seemed like a division of labor would be more efficient. Yet, that would render some basically defenseless against the others. The armed students would be able to exert undue influence. So we agreed that everyone would receive proper military training and then people could focus on wood work, metallurgy, etc.

I hope that after a few months of this we can separate out some of the really skilled warriors and train them to be ninjas. That will give us a heavy advantage in the years after the crash, as all hell is breaking loose.